Cargill estimates Brazil to export 5 million tonnes of corn in Aug

Ana Mano

Men work next to a truck unloading second corn (winter corn) near Sorriso in the Mato Grosso state, Brazil, July 26, 2017. Picture taken July 26, 2017.

Reuters/Nacho Doce

SAO PAULO (Reuters) - A Brazil Cargill executive estimated on Thursday that the country will have exported 5 million tonnes of corn in August, with the U.S.-based agriculture firm accounting for a large share of the trade.

Brazil is expected to export 35 million tonnes of corn this year, he said, higher than a 28-million-tonne forecast by the government and above industry group Anec's 30-million-tonne projection.

Brazil is set to account for 50 percent of global corn exports between this August and January next year, Paulo Sousa, the head of Cargill's local grains and oilseeds unit, told an industry conference.

"Cargill will be the leader," he said in relation to the company's ratio of Brazil's August corn exports, declining to elaborate. The company has operated in the country for 52 years.

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Brazil's prominence as a corn exporter in the second half of the year is due to winter corn, which is planted between February and March, and harvested between July and August.

"Brazil originates the cheapest corn in the world and will continue to do so until April or May of next year," he said.

Corn futures closed higher in Chicago on technical buying and short-covering at the end of the month. CBOT December corn CZ7 settled up 12-1/4 cents at $3.57-3/4 per bushel on Thursday.

A second annual corn crop, planted after soybeans are harvested, has made Brazil the world's second-largest exporter of the cereal and a major competitor to the United States in global markets. For a graphic, click tmsnrt.rs/2hP1YWk

The second corn harvest represents about 68 percent of Brazil's total corn crop, which this year is estimated at roughly 97 million tonnes.

"But winter corn is a lot more vulnerable to climate risks, so price volatility tends to be a constant issue," Cargill's Sousa said.

Last year, he said to illustrate his point, there was a steep fall in Brazil's corn production due to weather factors affecting winter corn planting in the first quarter. Because a significant portion of the winter corn had been traded by farmers in advance for the export markets, there was a problem on the supply side.

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"The price went up so much that it allowed exporters like Cargill and competitors to buy back what they had sold," he said, adding this was done to cover the production gap and cater to domestic demand. Not all of the exported corn could be bought back, he said.